tl;dr: A conversation in an airport security line highlights what is wrong with today’s banking system.
While standing in America’s most ineffective and disorganized TSA Precheck line (Newark), I struck up a conversation with a fellow traveler.
He was heading down to Puerto Rico to look for opportunities.
An older gentleman, probably in his early 70s, he spoke with a strong New York accent. His style was sharp and direct and it complemented the “explorer” look that he had, replete with a safari type hat, boots, a photographer’s vest, and pants with multiple pockets.
Why did he think there was an opportunity in Puerto Rico today?
He told me a story.
“Many years ago, I was talking to a friend of mine who worked at one of the big Wall Street banks. He was in the middle of doing a bond offering for Puerto Rico.
He told me ‘you know, there’s no way that Puerto Rico is ever going to be able to pay this money back. I’ve run the numbers. It’s not going to work.’”
Wait. The banker knew that his client was going to go into default (they have) but he went through with the offering anyway?
He sure did.
Why was that?
“Well,” the explorer continued with a smile, “when I asked my friend that question, he said: ‘It’s ¾ of a point commission and by the time they default, I’ll be retired.’”
The man in line with me laughed in a way that said, ‘yep, those Puerto Ricans were suckers and my friend is now living large because of it.”
I looked at him and said, “now you know why people hate bankers.” And even some ex-bankers hate bankers.
The conversation reminded me of a guy I met at the Satoshi Roundtable from the Caribbean,
“I saw how Wall Street’s irresponsibility destroyed the people of my country. You know what I say? F*ck the banks.”
When the choice for people comes down to “trust bankers” or “trust math,” it won’t be much of a choice.
Why People Hate Bankers was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.